Investors call for BAE bosses to resign

Shareholders are calling for both the chairman and chief executive of FTSE 100 defence firm BAE Systems (BAES.L) to resign after the group’s botched attempt at a merger with Franco-German rival EADS.

Private investor group ShareSoc today launched a campaign for the two men, Dick Olver and Ian King, to quit after their ‘failure of shareholder engagement’. Separately a trio of big institutional shareholders which between them own 18% of the group have demanded Olver’s resignation in a letter to the board, according to a report in the Financial Times.

BAE Systems' proposed merger with EADS collapsed nearly two weeks ago following intense political and shareholder pressure. Major shareholders, led by Invesco Perpetual's Neil Woodford, voiced their objections to the planned £30 billion deal, while the French, German and British governments jostled for influence over the proposed combined entity.

See our gallery of nine other FTSE 100 companies that have Invesco as a leading shareholder and need to keep Neil Woodford sweet.

Shareholder advisory group Pirc described it as ‘the latest example of deal falling apart amidst shareholder pressure’ of the sort that has scuppered M&A plans from blue chips including Prudential (PRU.L) and G4S (GFS.L).

But shareholders have been punished by the whole saga, with shares dropping by 15% since BAE first announced it was in talks with EADS over a possible merger. Today they are worth 310p.

Please visit our full site to view this interactive chart

Roger Lawson, chairman of ShareSoc commented today: ‘This looks to be a classic case of empire building by corporate management… it was never very clear what benefit BAE shareholders would get from the deal.’

According to the FT report, Invesco and the other two institutional investors criticised BAE’s ‘misguided’ strategy, claiming that Olver and senior independent director Peter Mason had lost credibility with investors.

ShareSoc plans to vote against the re-elction of Olver and King at the company’s AGM in May 2013, unless the two resign before then.

BAE maintains the merger would have represented a good deal for Woodford and other investors and believes it could have eventually proved this to doubting shareholders.

Separate reports have suggested that BAE plans to appease investors by spending the proceeds of a Saudi arms deal on a share buyback.

As well as Invesco, major shareholders in BAE include Franklin Templeton, Legal & General, Blackrock and Fidelity.